Fonterra sets out to reassure markets

Dairy co-operative Fonterra says it is providing assurances
about the safety of its products. Photo by ODT.

Fonterra has moved to persuade global customers that New
Zealand dairy products are safe to consume, in the wake of the
discovery of dicyandiamide residue in milk.

Chief executive Theo Spierings said the ''bottom line'' was
that its products were safe and customers could ''rest
assured'' that was the case.

Fonterra Shareholders Fund units took a small, immediate
knock as trading opened on the NZX yesterday after a weekend
in which international media latched on to the news that
small traces of a nitrate inhibitor had been found.

FSF units dropped 0.41%, or 3c, to $7.20 at the open of NZX
trading, and bid and ask prices were displayed briefly as low
as $7.14 and $7.18 before recovering to a range of $7.20 and
$7.23 in the first 10 minutes of trading. They were trading
at $7.15 mid-afternoon.

Mr Spierings said Fonterra's testing found only minute traces
of DCD in samples of some of its products and they were about
100 times lower than acceptable levels under European food
safety limits.

The Ministry of Primary Industries had confirmed the traces
posed no risk to human health, Mr Spierings said.

''DCD has never at any point been a food safety issue, and if
it had been, we would have been the first to speak out.

''Fonterra has one of the highest standard food supply chains
in the world,'' he said.

''We know some of our customers and regulators have
questions. We need to answer them, and that's exactly what we
are doing.

''We have strong science and we are providing assurances
about the safety of our products,'' Mr Spierings said.

Fonterra had been involved in a working group with the
Government, fertiliser companies, scientists and other dairy
industry representatives gathering information, scientific
opinion, and undertaking tests since November.

Federated Farmers food safety spokesman Dr William Rolleston
said some media reporting seemed to have moved beyond facts
and into ''uninformed opinion''.

''Residues of DCD nitrification inhibitors were detected but
the levels recorded were in the order of parts per million.

''These residues only came to light because New Zealand
continually tests for and refines testing for impurities,''
Dr Rolleston said.

''I doubt many countries test to the level we do but once DCD
was verified, our consumers and trading partners were
notified.

''We take this seriously ... and any suggestion otherwise is
scurrilous."

He said the industry was not hiding from genuinely informed
criticism but uninformed speculation and innuendo was
irresponsible.

''It is like yelling ''fire'' in a packed theatre.''

DCD was a nitrification inhibitor used by the dairy industry
to reduce nitrate leaching into waterways and greenhouse gas
emissions.

Organic Dairy and Pastoral Group chairman Glenn Mead, of
Otago, said nitrification inhibitors such as DCD were never
going to be the magic bullet to replace good farm management
practices that reduced nitrate leaching.

Research at Massey University showed dairy farms could
produce milk sustainably and economically and meet the
strictest council guidelines for run-off of nitrogen, without
using nitrification inhibitors, he said.

Labour primary industries spokesman Damien O'Connor
questioned why the issue was not disclosed in September,
which was when he said Fonterra discovered traces of DCD.

Mr Spierings later rubbished Mr O'Connor's claim that it was
hushed up to allow the Fonterra Shareholder Fund float to
occur unimpeded in November.

Green Party agriculture spokesman Steffan Browning said New
Zealand's 100% pure marketing advantage was crucially
important to its farmers ''and we should be protecting it,
not asking the rest of the world to expect less than 100%''.
- Additional reporting BusinessDesk